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Behind on your mortgage? Be sure to RSVP to this seminar today!

Friday, July 16th, 2010

Are you behind on your mortgage? Are you upside down on your home? Has the bank denied you a loan modification? A short sale may be an option for you.

If you are not sure what your next steps may be, or have questions - be sure to attend this seminar. 

Featuring guest speakers Barry L. Miller, ESQ. and Rosie Troche, ESQ – Attorneys with the Law Offices of Barry L. Miller

Hosted by Vanessa Franz Barnes with Keller Williams Realty. Vanessa has been licensed since 2002 and has sold over $50 Million in Real Estate during her career. She has numerous certifications including CSP – Certified Short Sale Professional and SFR – Short Sale and Foreclosure Resource Certification.

 Seminar is offered on two dates: Tuesday, August 10th from 5:30-7:30 OR Saturday, August 14th from 10-noon

Please RSVP or text Vanessa Barnes, Realtor® at 407-973-2414, or email: Vanessa@SimplyFloridaRealEstate.com

Location: Celebration K-8 School (510 Campus Street) in the Imagineering room.

**Please disregard this email/seminar if you are already listed/actively working with a Realtor®

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Foreclosure has unforeseen risk: lawsuits from lenders

Wednesday, June 16th, 2010

Before Larry Thomas unloaded his Pompano Beach, Fla., home last fall for a fraction of what he paid, he cut a deal that will keep him from worrying about a huge debt hanging over his head.

Thomas insisted that his lender, American Home Mortgage Servicing, agree not to come after him for the estimated $174,000 he still owed on his two mortgages. “I feel incredible relief,” the 32-year-old restaurant manager said last week.

Others may not be as fortunate.

Lenders will file a tidal wave of lawsuits against homeowners in the next few years as a way to recoup losses when home sales or foreclosure auctions don’t result in enough money to pay the mortgages in full, real estate and legal analysts say.

“It will be a dramatic problem because the borrowers will not know it’s coming,” said Frank Alexander, a law professor at Emory University in Atlanta.

Laws vary from state to state. In Florida, banks have five years from the date of the sale to file for so-called deficiency judgments and up to 20 years to collect. Lenders can garnish wages or make claims on borrowers’ assets.

Before the housing meltdown, few lenders filed these lawsuits. Foreclosures and short sales – selling for less than the mortgage amount – were relatively rare at the time, and many of the homeowners didn’t have sufficient assets to make it worth the banks’ time and expense.

But following the heady days of the housing boom that spawned millionaire investors seemingly overnight, it’s not uncommon for borrowers to default on mortgages while still holding lucrative investments.

As the next wave of the housing crisis plays out, those most in danger of getting slapped with lawsuits include angry homeowners who ransack properties they’re losing in foreclosure and borrowers who walk away from “underwater” mortgages. In both cases, analysts say, banks will want to discourage other people from such behavior.

More than four in 10 homeowners said they would consider abandoning properties that are underwater, or worth less than the mortgages, according to a national online survey released last week by real estate firms Trulia and RealtyTrac.

Mortgage companies typically won’t sue homeowners who negotiate in good faith or those who default on their loans because of job losses or other unforeseen circumstances, said Anthony Manno, an executive with Steelbridge Real Estate Services. The Miami-based company works with lenders on the resale of foreclosed homes.

Still, borrowers shouldn’t rely on a lender’s verbal commitment, Manno said. “Get something in writing.”

Critics insist that spite will play a role in some of these lawsuits. Lenders deny it.

“We certainly would not do that,” said Russell Greene, president of Grand Bank & Trust of Florida in West Palm Beach. “It’s a business decision – not an emotional decision. It’s very time-consuming to take someone to court.”

Even if lenders don’t pursue the judgments, they could sell mortgage debt to collection agencies at deep discounts. And it will be those debt collectors that will hound borrowers, said Shari Olefson, a Fort Lauderdale real estate lawyer.

“They paid money to be able to hassle you,” she said.

Thomas, the former Pompano Beach homeowner, said he didn’t have money for a downpayment but was approved for 100 percent financing on two loans in spring 2006. He bought a three-bedroom home for $245,000.

Thomas said he soon became responsible for the entire mortgage after his roommate lost his job. That became even more difficult after Thomas took a pay cut.

So he attempted a short sale, eventually finding plenty of prospective buyers interested in a property that had plummeted nearly 70 percent in value. He and American Home Mortgage accepted one offer for $80,000. After closing costs, the lender netted about $71,000, said his Fort Lauderdale lawyer, Joe Kohn.

But before the sale closed, Kohn had American Home Mortgage waive its right to collect on the remaining mortgage debt.

Christine Sullivan, a spokeswoman for the lender, wrote in an e-mail that she can’t discuss Thomas’ case because of privacy issues. But when homeowners seeking short sales demonstrate legitimate hardship, “we provide a full release of liability, and we do not pursue deficiency judgments.”

Some banks say they won’t file a lawsuit, though they aren’t willing to put that in writing, Kohn said.

“I have no choice but to accept that,” he said. “Even when you play by the rules, banks don’t always do what we’d like.”

Under new government guidelines for short sales that took effect this spring, lenders aren’t supposed to hold homeowners responsible for any remaining mortgage debt. But not all short sales fall under the guidelines, while some lenders choose not to implement them, Kohn said.

A forgiven mortgage balance through 2012 is not considered taxable income on a primary residence as long as the debt was used to buy or improve the house. But borrowers who walk away from investment properties risk having to pay federal income taxes on the forgiven amount.

Homeowners who hand their properties back to the bank through so-called deeds in lieu of foreclosure also should make sure they won’t be on the hook for any mortgage debt.

With friends facing deficiency judgments, Thomas said he’s grateful he sought legal advice on how to avoid a lawsuit. He now rents a home west of Boca Raton, but he just found out the owner is in foreclosure.

“I’ve escaped my own problem, only to inherit someone else’s,” Thomas said. “But this is nothing. It’s just a matter of picking up the pieces and moving on to the next rental.”

© 2010 Sun Sentinel, Paul Owers. Distributed by McClatchy-Tribune News Service.

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Short Sale

Saturday, April 24th, 2010

With so many distressed homeowners owing more than their homes are worth, short sales have become lifelines.

Short Sale means the mortgage lender has agreed to allow the home to sell for market value. The lender writes off the rest of the debt, and the homeowner walks away.

But is it really this simple?

Lenders are increasingly adding language to the approval package, reserving the right to pursue the deficiency later – that is, the difference between what you owed on the house and what it sold for.

Some homeowners, so anxious to get out of a pending foreclosure, skip right over that part of the letter. Some understand but opt to take their chances, betting they won’t hear from the lender again.

For some lucky buyers, this has been the case – so far. They’ve sold their home as a short sale, moved on, and haven’t had any problems. But other lenders require the seller to agree upfront to pay back a set amount.

‘It seems fair’

Realtor Paul De La Torre, of Keller Williams, said lenders almost always ask his clients to agree to pay at least some of the debt back. Lenders’ requests, he said, range from 15 percent of the balance to agreeing to a payment plan – such as $80 a month for 15 years.

Lenders don’t always go after short sale homeowners. But in Florida, lenders can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has 20 years to collect the cash.

This is particularly frightening because lenders could wait until the debtor is back on their feet to act. The homeowner could recover financially only to discover years later that they owe the bank tens of thousands of dollars.

Insurance companies

De La Torre said homeowners are even more likely to be required to pay a deficiency if they have mortgage insurance. (Borrowers who have less than 20 percent equity in their homes typically are required by their lenders to cover this insurance in case they default.)

Mortgage insurance companies “are getting pretty strict about short sales,” he said. “They have to sign off on the short sale, too, and many are not only asking for promissory notes but are ordering their own appraisals.”

Deficiency judgments aren’t only a problem in short sale cases. They can happen following a foreclosure, too.

A lender can take back the home, sell it and then come back after the borrower for the difference between that amount and the balance on the old mortgage. This is allowed in Florida and most other states.

So what can a homeowner do?

Not much, in the case of a foreclosure. But when negotiating a short sale, the homeowner must sign off on the paperwork, too, said Jim Davis, a real estate agent with Century 21 A&M Realty.

Borrowers can ask to be released from the debt, and sometimes that works. In the past three to six months, though, Davis said he’s seen many lenders require some form of payment.

That’s where negotiation can kick in.

Some lenders detail how much money they might come after later. Others don’t specify, and that may mean the full amount. Davis recommends anyone signing a short sale agreement insist the lenders be specific about deficiency plans. Read the fine print, he said, and ask lots of questions.

If they don’t, it may haunt them later.

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What you should know about home foreclosure

Friday, March 19th, 2010

After more than six months of wrangling with her bank to get a reduced mortgage payment through a federal loan modification program, Debra Jacobs has had enough. The West Palm Beach resident is walking away from her home of 14 years.

As homeowners grow increasingly frustrated by the nation’s struggling foreclosure prevention programs, more may consider walking away as a viable alternative.

But there’s more to it than just stopping your mortgage payments and handing over the keys. Knowing the consequences, however, will at least help the borrower make an informed decision, she said.

The biggest gamble in walking away is whether a lender will try to seize a borrower’s assets to pay for its losses, Wiener said. Lenders have up to 20 years in Florida to collect a deficiency judgment.

But banks are more likely to go after borrowers who strategically default – a term meaning the homeowner can afford the mortgage but decides to stop paying because the home is no longer a good investment.

Scott Haft, who oversees the mortgage modification and foreclosure defense division at the law firm LaBovick & LaBovick, said some lenders are willing to forgive a mortgage debt if a borrower voluntarily turns over the home without going through a lengthy court foreclosure.

“We say, ‘We’ll give you the keys on Monday, but you have to waive your right to pursue my client in the future for deficiencies,’ “ said Haft, whose company has offices in West Palm Beach, Boynton Beach and Palm Beach Gardens. “Many times, the lender is only interested in regaining the property.”

Another concern is whether the homeowner will have to claim forgiveness of debt on tax returns for the amount of money owed the lender.

The Mortgage Debt Relief Act of 2007 temporarily exempts people who lose their primary residence from having to claim the canceled debt, but the act is scheduled to sunset Dec. 31, 2012, and can’t be applied to investment properties.

“Everybody’s relationship with their properties and their loans is different,” Wiener said. “People need to take a look at where they are in life before they decide to walk away.”

One thing Wiener asks clients is whether they will need good credit in the near future to secure a car or student loan. A foreclosure can knock up to 300 points off a credit score – damage that can take years to repair and will stay on your report for seven years.

Lenders have recently stepped up efforts to ease the foreclosure process and avoid the complications when a homeowner walks away.

Citigroup launched a program this month that allows some borrowers to stay in their homes for six months without paying. In return, the homeowner turns in the keys at the end of the time period and keeps the home in good shape.

The federal Home Affordable Foreclosure Alternatives Program, announced in November, gives lenders incentives for offering deed-in-lieu of foreclosure and for approving short sales.

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Consumer Protection for Making Home Affordable? May come soon

Saturday, March 13th, 2010

 The Obama administration is expected to unveil additional protections to ensure homeowners are treated fairly and consistently under its mortgage relief program.

The policies, outlined in a draft Treasury Department document, would address long-standing complaints from housing counselors. They have cited cases of lenders continuing with foreclosures while homeowners were being evaluated for help. That practice would be banned under the new rules.

Government officials acknowledge treatment of homeowners has been a problem under the $75 billion mortgage relief effort.

Some lenders, for example, continue foreclosure proceedings while evaluating a borrower for help under the program. Under the new policies, mortgage companies would have to stop all legal action once a borrower enrolls in the program.

Borrowers rejected from the program would also have 30 days to appeal the decision. In that time, lenders could schedule a foreclosure sale but not conduct it.

And mortgage companies would be required to consider applications from homeowners in bankruptcy. That’s optional under the current rules.

The $75 billion program is designed to lower borrowers’ monthly payments by reducing mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years.

To complete the process, homeowners need to make three payments and provide proof of their income, plus a letter documenting their financial hardship.

But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out 1 million enrolled have had the terms of their mortgages changed permanently.

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BOA the newest short sale process!

Wednesday, January 27th, 2010

BOA has once again changed their short sale process. Here is the latest procedure:

1. Homeowner calls BOA Equator 866-770-7961 and assigns their agent to the file.  Be sure agent has equator account already. BOA ties the email address to the file (ie. homeowner has loan number 12345 and gives BOA their agents email address). If agent does NOT have an equator account, you will need to call to get one.

2. Homeowner will also receive login/password for the equator site and will be required to complete tasks assigned to them. ***These tasks are time sensitive so homeowner should be sure to complete in a timely manner. This could delay the process if these are not completed.

3. Agent (should) get an email from BOA stating that a homeowner has assigned a file on equator. Agent must log-in and completed the tasks assigned to them. Tasks may include: Accepting the assignment of the short sale, uploading offer, preliminary HUD, MLS sheet, MLS number, to name a few. Again these are time sensitive and must be completed as they are assigned otherwise the process could be delayed.

4. After the borrower and agent tasks are completed, BOA will be prompted to complete their own tasks. Check in weekly to make sure the process is not stalled and BOA is completing their tasks.

I am still waiting to see this process from start to finish.  All my files transferred to this system about 2 weeks ago.

Keep checking back!

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HAFA – Homeowners Affordable Foreclosure Alternatives Program (Short Sale Solutions)

Friday, January 8th, 2010

 1. What is HAFA?

Initially announced on May 14, 2009, with guidance and standard forms issued on November 30, 2009, the program will help owners (referred to below as borrowers) who are unable to retain their home under the Home Affordable Modification Program (HAMP).

A borrower (the current owner) may be able to avoid a foreclosure by completing a short sale or a deed-in-lieu of foreclosure (DIL) under HAFA.

The guidance and forms released on November 30 do not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. Those enterprises will issue their own HAFA guidance and forms.

2. Who is eligible?

The borrower must meet the basic eligibility criteria for HAMP:

  • Principal residence.
  • First lien originated before 2009.
  • Mortgage delinquent or default is reasonably foreseeable.
  • Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).
  • Borrower’s total monthly payment exceeds 31% of gross income.

3. How is the program being implemented?

Supplemental Directive 09-09 (November 30, 2009) gives servicers guidance for carrying out the program. All servicers participating in HAMP must also implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include such factors as the severity of the loss involved, local market conditions, the timing of pending foreclosure actions, and borrower motivation and cooperation.

Short Sale Agreement (SSA). The servicer will send this to the borrower after determining the borrower is interested in a short sale and the property qualifies. It informs the borrower how the program works and the conditions that apply.

Request for Approval of Short Sale (RASS). After the borrower contracts to sell the property, the borrower submits a RASS to the servicer within 3 business days for approval.

Alternative RASS. If the borrower already has an executed sales contract and asks the servicer to approve it before an SSA is executed, the Alternative RASS is used instead. The Servicer must still consider the borrower for a loan modification.

 4. How will HAFA improve the short sales process?

HAFA:

Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

Uses borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP.

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

Uses standard processes, documents, and timeframes/deadlines.

Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).

 5. What are the timelines for HAFA?

Based on a servicer’s written policy, the servicer must consider every potentially eligible borrower for HAFA.

If a servicer has not already discussed a short sale or DIL with the borrower, it must notify the borrower in writing of these options and give the borrower 14 calendar day to respond, orally or in writing. If the borrower does not respond, that ends the servicer’s duty to give a HAFA offer.

Servicers must consider HAMP-eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:

  • Does not qualify for a HAMP trial period plan.
  • Does not successfully complete a HAMP trial period plan.
  • Is delinquent on a HAMP modification (misses at least 2 consecutive payments).
  • Requests a short sale or DIL.

The borrower has 14 calendar days from the date of the Short Sale Agreement to sign and return it to the servicer.

The Short Sale Agreement must give the borrower an initial period of 120 days to sell the house (extensions permitted up to a total of 12 months).

Within 3 business days of receiving an executed purchase offer, the borrower (or agent) must submit a completed RASS to the servicer, including (i) a copy of the sale contract and all addenda; (ii) buyer documentation of funds or pre-approval/commitment letter from a lender; and (iii) all information on the status of subordinate liens and/or negotiations with subordinate lien holders.

Within 10 business days after the servicer receives the RASS and all required attachments, the servicer must approve or deny the request and advise the borrower.

The servicer may require the closing to take place within a reasonable period after it approves the RASS, but not sooner than 45 days from the date of the sales contract unless the borrower agrees.

The servicer must release its first mortgage lien within 10 business days (or earlier if required by state or local law) after receipt of sales proceed from a short sale or delivery of the deed in the case of a DIL. Investor must waive rights to seek deficiency judgment and may not require a promissory note for any deficiency.

 6. Do servicers have to treat similarly situated borrowers the same?

Yes, but not all borrowers will qualify for a short sale or DIL.

Participating servicers must have a written policy, consistent with investor guidelines, that describes the basis for deciding whether to go ahead with a short sale in individual cases.

The policy may include such factors as the severity of the loss involved, local market conditions, the timing of pending foreclosure actions, and borrower motivation and cooperation.

 7. What are the steps for evaluating a loan to see if it is a candidate for HAFA?

Borrower solicitation and response.

Assess expected recovery through foreclosure and disposition compared to a HAFA short sale or DIF.

Use of borrower financial information from HAMP. (May require updates or documentation.)

Property valuation.

Review of title.

Borrower notice if short sale or DIL not available (to borrowers that have expressed interest in HAFA).

 8. Can the servicer complete a foreclosure during the HAFA process?

No. A servicer may initiate foreclosure, but may not complete a foreclosure sale:

While determining borrower’s eligibility and qualification for HAMP or HAFA.

While awaiting the return of the Short Sale Agreement by the 14 day deadline.

During the term of a fully executed Short Sale Agreement (while the borrower seeks to sell).

Pending the transfer of ownership based on an approved sales contract per the RASS or Alternative RASS.

Pending transfer of ownership via a DIL by the date specified in the SSA or DIL Agreement.

 9. What else should I know?

The deal must be “arms length.” Borrowers can’t list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship.

The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, the tax may not apply. Forgiven debt will not be taxed if the amount of forgiven debt does not exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Check with a tax advisor.

The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment. There will be a negative effect on credit scores.

Buyers may not reconvey the property within 90 days after closing.

10. When does the program end?

Short Sale Agreements must be executed and returned to the servicer no later than 12/31/2012.

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BOA short sale update….how they work

Monday, October 12th, 2009

I submitted 2 files at the same time. One file is being placed with a phase 2 negotiator already, but the other file has had several issues. They closed out the file for no reason other than to tell me the offer price was too low. When I asked how they came to that conclusion (because I know a BPO was not completed) they quickly informed me they would re-open the file.

Here is a quick update on the phases:
Upload the documents to BOA – always CALL first and confirm where to fax. As the number does change from week to week.
Phase 1 negotiator – could take up to 15 days to assign, once assigned the phase 1 negotiator will review and make sure all the necessary documents are with the file and order the appraisal/BPO.
Phase 2 negotiator – once the phase 1 negotiator sends to phase 2 (takes 3-5 days to assign) then they review the numbers on the HUD and decide what they will or will  not pay.
Then once phase 2 is completed it will go for investor review and PMI review (if applicable)

How they work? This is still TBD. But I will say the process seems to have improved over the last several months.

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Feds push mortgage companies to modify more loans

Sunday, August 30th, 2009

The Obama administration, scrambling to get its main housing initiative on track, extracted a pledge from 25 mortgage company executives to improve their efforts to assist borrowers in danger of foreclosure.

The Treasury Department reached a verbal agreement with the executives for a new goal of about 500,000 loan modifications by Nov. 1 and stressed the program’s urgency.
The sessions came amid concerns that the Obama administration will fall far short of its original goal of helping up to 3 million to 4 million troubled borrowers with modified loans.
As of the end of July only about 200,000 borrowers were enrolled in three-month trial loan modifications, out of about 370,000 who were offered modifications by mortgage companies.

For months, borrowers, housing counselors and activist groups alike have complained that the process is a confusing, bureaucratic nightmare. Housing counselors say borrowers are being charged upfront fees and given inaccurate or confusing information about the program. The delays are long and, in some cases, lenders continue the foreclosure process while loans are being reviewed for a modification.

Recently, an activist group in Minnesota filed a lawsuit seeking to stop home foreclosures in that state. Mark Ireland, an attorney with the Minnesota-based Foreclosure Law Relief Project, said the government has failed to establish the procedures needed to ensure the fair and uniform administration of the program. Loan servicers are not required to tell a homeowner why they were denied a loan modification.

One reason progress has been sluggish is that loan servicers have had to hire and train thousands of employees. The loans have been bundled and sold to hundreds of investors as securities, which often have differing rules about loan modifications. Plus, mortgage companies have been swamped with thousands of calls from borrowers who want to take advantage of the program, and must sort out who is facing a legitimate financial hardship.
Many servicers didn’t get set up to deal with the surge in problem loans and modifications until this year, said Thomas Lawler, a housing economist in Northern Virginia.

Under the program, servicers can pocket up to $4,500 for each loan they modify. But they won’t start to be paid until homeowners have made on-time payments for three months.
If the program doesn’t kick in high-gear soon, the recent optimism about a real estate and economic recovery could fade as mo

“Foreclosures are still rapidly escalating,” said Andrew Jakabovics of the Center for American Progress, a think tank with close ties to the Obama administration. “If we don’t get a handle on that … the economy is going to have a difficult time recovering.”
Copyright © 2009 The Associated Press, Alan Zibel and Danie Wagner, AP business writers. Associated Press Writer Steve Karnowski contributed to this report from Minneapolis.

Please visit our website for some helpful links for sellers looking for solutions.

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Seller Solutions for Troubled Loans

Thursday, August 27th, 2009

Here are some possible temporary solutions for short-term problems, such as being one or two months behind in your mortgage due to illness. Other more permanent solutions address long-term financial difficulties, such as job lay-offs or long-term unemployment. If you have an FHA-approved loan, special loan modification programs may be available to you–ask your lender about them. Unfortunately, in some cases, keeping your home may not be possible–options for handling that situation are available as well.

Temporary solutions for short-term financial problems:
  • Reinstatement: Lenders are often willing to “reinstate” your loan if you make up the back payments in a lump sum by a specific date. A forbearance plan may accompany this option.
  • Forbearance: Your lender may be able to provide a temporary reduction or suspension of your mortgage payments for a short period, such as 3 or 4 months. After this time, your lender will work with you to create a repayment plan for the loan. You may qualify for forbearance if you have experienced a reduction in income (for example, if you have become unemployed) or an increase in living expenses (for example, higher medical bills). You must provide information to your lender to show that you will be able to stick with the new payment plan.
  • Repayment plan: Your lender may agree to a plan that includes your regular monthly payments plus a portion of the past due payments each month until your payments are caught up.
Long-term solutions or adjustments to your loan:
  • Loan modifications: Your lender may be willing to rewrite the terms of your original mortgage loan to address your financial situation. A loan modification is designed to make your monthly payments affordable. Changes to your loan may include extending the number of years to repay and changing the interest rate, including changing an adjustable rate to a fixed rate. You may have to pay a processing fee to obtain a loan modification.
  • Partial claim: If your mortgage is insured by a private mortgage insurance firm, your lender might help you file a claim. Some insurers provide a one-time, interest-free loan to bring your account up to date. The interest-free loan is due when you refinance, pay off your mortgage, or when you sell the property.
If keeping your home is not an option, you may want to consider these alternatives:
  • Sale: Your lender will usually give you a specific amount of time to find a buyer and pay off the amount you owe on your mortgage. Your lender may require you to use a real estate professional to help you sell the property.
  • Pre-foreclosure sale or short sale: If you can’t sell the property for the full amount of the loan, your lender may accept the amount you get for the selling price, even if it is less than the amount you owe. You may owe income taxes on the difference between the amount you owe and the amount you are able to pay back. Check with the Internal Revenue Service for tax information.
  • Assumption: A qualified buyer may be allowed to assume (take over) your mortgage. Ask your lender whether this option is available to you.
  • Deed-in-lieu of foreclosure: You may be able to “give back” your property to the lender, who then forgives the balance of your loan. Again, there may be income tax consequences, so check with the IRS. This option will not save your home, but it is less damaging to your credit rating. Some lenders impose certain restrictions on taking back property. For example, they may require that you try to sell your home at a fair market value for at least 90 days.

Courtesy of http://www.federalreserve.gov/pubs/brochure.htm

For more information you may also visit our website and click on Help for Sellers.

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